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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Flextronics International Ltd was 0.02. The lowest was -6.24. And the median was -2.48.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Flextronics International Ltd for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9367||+||0.528 * 0.8975||+||0.404 * 2.0798||+||0.892 * 0.9339||+||0.115 * 1.1047|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2108||+||4.679 * -0.0458||-||0.327 * 0.9945|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $2,045 Mil.|
Revenue was 5772.698 + 6763.177 + 6316.762 + 5566.248 = $24,419 Mil.
Gross Profit was 406.337 + 452.467 + 396.916 + 352.341 = $1,608 Mil.
Total Current Assets was $8,315 Mil.
Total Assets was $12,385 Mil.
Property, Plant and Equipment(Net PPE) was $2,258 Mil.
Depreciation, Depletion and Amortization(DDA) was $515 Mil.
Selling, General & Admin. Expense(SGA) was $955 Mil.
Total Current Liabilities was $6,572 Mil.
Long-Term Debt was $2,709 Mil.
Net Income was 61.344 + 148.91 + 122.977 + 110.85 = $444 Mil.
Non Operating Income was -1.481 + -44.415 + -45.748 + -33.174 = $-125 Mil.
Cash Flow from Operations was 196.673 + 277.777 + 299.719 + 362.276 = $1,136 Mil.
|Accounts Receivable was $2,338 Mil.
Revenue was 5951.6 + 7025.054 + 6528.517 + 6642.745 = $26,148 Mil.
Gross Profit was 378.817 + 408.657 + 377.081 + 380.785 = $1,545 Mil.
Total Current Assets was $8,741 Mil.
Total Assets was $11,653 Mil.
Property, Plant and Equipment(Net PPE) was $2,092 Mil.
Depreciation, Depletion and Amortization(DDA) was $540 Mil.
Selling, General & Admin. Expense(SGA) was $844 Mil.
Total Current Liabilities was $6,755 Mil.
Long-Term Debt was $2,026 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2044.757 / 24418.885)||/||(2337.515 / 26147.916)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1545.34 / 26147.916)||/||(1608.061 / 24418.885)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (8315.126 + 2257.633) / 12384.981)||/||(1 - (8740.9 + 2092.167) / 11652.891)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(540.49 / (540.49 + 2092.167))||/||(515.367 / (515.367 + 2257.633))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(954.89 / 24418.885)||/||(844.473 / 26147.916)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((2709.389 + 6572.205) / 12384.981)||/||((2025.97 + 6755.091) / 11652.891)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(444.081 - -124.818||-||1136.445)||/||12384.981|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Flextronics International Ltd has a M-score of -2.45 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Flextronics International Ltd Annual Data
Flextronics International Ltd Quarterly Data